AIG 2013 Annual Report Download - page 90

Consolidated Comparison for 2013 and 2012
Income from continuing operations before income tax expense was $9.4 billion in 2013 compared to $2.9 billion in
2012, and reflected the following:
•pre-tax income from insurance operations of $5.1 billion, $6.5 billion
Continued Improvement in
and $213 million from AIG Property Casualty, AIG Life and Retirement
Insurance Operations
and Mortgage Guaranty in 2013, respectively, compared to pre-tax
income of $2.0 billion, $3.8 billion and $15 million for these operations •For the fourth consecutive year we
in 2012. Net investment income, excluding gains recognized in 2012 posted a full year profit.
from our previous investments in ML II, ML III and AIA, improved in
•Our total AIG Property Casualty
2013 compared to 2012 due to higher returns on alternative
accident year loss ratio, as adjusted,
investments, primarily due to the performance of equity markets. In
improved each year during the past
addition, 2013 includes income from legal settlements related to the
four years.
financial crisis of $1.0 billion. Included in 2012 pre-tax income for AIG
Property Casualty were catastrophe losses of $2.7 billion, largely •We enhanced spread income and
arising from Storm Sandy and severe losses of $326 million. See actively managed through the low
Note 3 to the Consolidated Financial Statements for further interest rate environment.
information; •Our investment portfolio
performance, excluding gains
•loss on extinguishment of debt of $651 million in 2013 resulting from
recognized in 2012 from our
redemptions and repurchases of, and cash tender offers for, certain
previous investments in ML II, ML III
debt securities; and
and AIA, improved due to higher
•net investment income in 2012 reflected an increase in fair value of returns on alternative investments,
AIG’s interests in AIA ordinary shares and ML III of $2.1 billion and driven primarily by equity market
$2.9 billion, respectively. gains.
For the year ended December 31, 2013, the effective tax rate on income from continuing operations was 3.8 percent.
The effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily
due to tax benefits of $2.8 billion related to a decrease in AIG Life and Retirement’s capital loss carryforward
valuation allowance, $396 million related to a decrease in certain other valuation allowances associated with foreign
jurisdictions and $298 million associated with tax exempt interest income. These items were partially offset by
charges of $632 million related to uncertain tax positions.
For the year ended December 31, 2012, the effective tax rate on income from continuing operations was (27.9)
percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent
primarily due to decreases in AIG Life and Retirement’s capital loss carryforward valuation allowance of $1.9 billion
related to the actual and projected gains from AIG Life and Retirement’s available-for-sale securities, and tax effects
associated with tax exempt interest income of $302 million. These items were partially offset by changes in uncertain
tax positions of $446 million.
Consolidated Comparison for 2012 and 2011
Income from continuing operations before income tax expense was $2.9 billion in 2012 compared to $(0.9) billion in
2011 and reflected the following:
• pre-tax income from insurance operations of $2.0 billion, $3.8 billion and $15 million from AIG Property Casualty,
AIG Life and Retirement and Mortgage Guaranty in 2012, respectively, compared to pre-tax income (loss) of
$2.1 billion, $3.0 billion and $(77) million for these operations in 2011. Included in 2012 pre-tax income for AIG
Property Casualty were catastrophe losses of $2.7 billion, largely arising from Storm Sandy, and severe losses of
$326 million. Included in 2011 pre-tax income for AIG Property Casualty were catastrophe losses of $3.3 billion,
largely arising from Hurricane Irene, U.S. tornadoes and the Great Tohoku Earthquake & Tsunami in Japan (the
Tohoku Catastrophe) and severe losses of $296 million. See Note 3 to the Consolidated Financial Statements for
further information;
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AIG 2013 Form 10-K72
ITEM 7 / RESULTS OF OPERATIONS
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